They're not claiming to push the limits of any of the laws of physics, so I would say, no, it doesn't sound too good to be true. It does, however, sound like a pretty radical step forward. As such, prudence dictates a certain amount of skepticism. If it is as good as it claims, then it won't be too long until it comes into common usage. At that point it will be a lot easier to judge just how good it really is. (And, of course, if it never gets to that point then we'll know that it was not nearly as good as the claims.)

More than anything else it was because it was a fuel hog by comparison.
Interesting to see that this design is a Wankel

Just form a quick glance at what they intend, would require a relatively low RPM and I would assume a large flywheel, think steam engine type of operation

Actually its not a wankel design I looked at his designs online about a year go and I'm watching it rather closely to just imagine an outboard with that kind of power to weight ratio. I could have a 20 HP outboard on my islander with a net weight savings over my current 8 horse.

Not only that, also burns plenty of oil, and the apex seals wear out quickly, requiring frequent maintenance. However, they are very reliable due to their simplicity.

The oil usage is what did them in due to emissions concerns. The X2 changes the position of the seals into the housing itself and claims to not need oil injection. Running it on diesel probably helps with lubrication for the seals.

For those that haven't seen it they have a video of how it operates here:

The partial "constant volume" during the start of the power cycle would help to extract more power out of the fuel burning because cylinder pressure will stay higher longer. That is where some of the thermal efficiency comes from. The increasing volume of a typical Otto cycle drops cylinder pressure very quickly. That is why common rail diesel engines will inject fuel multiple times per power stroke to try and keep cylinder pressure higher longer.